Citigroup's research report indicated that the recent reduction in mortgage rates roughly met market expectations. It is expected that the current mortgage rate will be fixed at the mainland loan market quote rate (LPR) by the end of October, with a reduction of 30 basis points. The new mortgage rate was set at a reduction of 60 basis points in August. Additionally, there is a possibility of a 25 basis points reduction in the 5-year LPR on October 20, resulting in the total existing mortgage rate dropping from 4.05% in the first half of the year to 3% in the first quarter of next year. According to the bank's forecast, this will affect the bank's net interest margin and profit for the 2025 fiscal year by 9.5 basis points and 7.7% respectively, which broadly meets expectations.

The bank also proposed that the People's Bank of China may allow more frequent repricing of mortgages after November 1, which could accelerate the repricing of loans in domestic banks, putting greater pressure on the net interest margin of banks in the context of interest rate cuts.

Citigroup stated that in the context of significantly rising sentiment in the stock market, short-term preferences lean towards high-risk domestic brokerages rather than domestic banks. Historically, the profitability and stock prices of online and traditional brokerages have been more sensitive to the performance of A-share market indices. It is recommended that investors looking to profit from the overall rise in the A-share market can accumulate positions in brokerages with high sensitivity to daily trading volumes, such as East Money Information (300059.SZ), China Galaxy (06681.HK), China International Capital Corporation (03908.HK), and GF SEC (01776.HK). (vc/k)

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